Fossil-fuel subsidies

For decades, fossil-fuel subsidies have encouraged wasteful spending and harmful emissions. In September 2009, the G-20 agreed to phase them out. GSI research uncovers the characteristics of fossil-fuel subsidies and lessons for reform.

Research

A Guidebook to Fossil-Fuel Subsidy Reform

There is no one-size-fits-all strategy for fossil-fuel subsidy reform—but there are a set of planning stages that are generic, along with many common issues, challenges and potential solutions. The purpose of this guide is to advise countries on the process for formulating an effective reform strategy that will fit their individual objectives and circumstances. It is aimed at policy-makers in Southeast Asia, but much of its guidance could apply to any region.

The leaders of the Group of Twenty (G-20) countries agreed in September 2009 to phase-out inefficient fossil-fuel subsidies over the medium term. This section of the GSI website is dedicated to tracking the progress that has taken place since this commitment.

Impact of Fossil Fuel Subsidies on Renewable Energy

In 2013, the International Energy Agency (IEA) estimates that consumer subsidies for fossil fuels amounted to US$548 billion, while subsidies for renewable energy amounted to US$121 billion. However, a simple comparison of subsidy expenditure does not reveal the extent to which renewable energy is disadvantaged. To understand the exact impact of this distorted playing field, it is necessary to explore how different kinds of subsidy can affect investment decisions in different ways in specific energy sectors.

Supporting Country Reform Efforts

The GSI works with governments, civil society and the private sector to help progress fossil-fuel subsidy reform. The following resources are intended to support national governments that are reducing fossil-fuel subsidies, as well raise awareness on the process and impacts of reform among the citizens.

Fossil Fuels - At What Cost?

Globally, subsidies to fossil fuels may be on the order of US$ 600 billion per year, of which the GSI estimates about US$ 100 billion is provided to producers. Nobody knows the real number, however, because there is no international framework for regularly monitoring fossil-fuel subsidies. In the "Fossil Fuels - At What Cost?" series, the GSI works to improve subsidy estimates by undertaking detailed country surveys of these subsidies for producers. Studies to date include Canada, Indonesia, Norway and Russia.

Modelling the Impacts of Fossil-Fuel Subsidy Reform in Asia

Fossil fuel subsidies are a prominent feature of many Asian economies, but they contribute to fiscal imbalances and restrict public expenditure on development priorities such as education, health, and infrastructure. In collaboration with the Asian Development Bank, the GSI coordinated a series of studies seeking to identify fossil-fuel subsidies in a range of Asian countries and to use economic models and energy system models to project the impacts of policy reform.

These studies review knowledge to date on the scale of subsidies to electric power and to transport. They summarize estimates of subsidies to fossil-fuels, renewable power, nuclear power and biofuels, and discuss how subsidies to different energy types might be compared.

Untold Billions: Fossil-Fuel Subsidies, Their Impacts and the Path to Reform

Untold Billions is a series of five papers examining important themes related to fossil-fuel subsidies: subsidies to fossil-fuel producers; the economic, social and environmental effects of subsidy reform; the political economy of subsidy reform; strategies for subsidy reform; and the role of transparency in accelerating reform.

The GSI has developed a broad range of case studies of fossil-fuel subsidy reform. This includes a review of subsidies and reform attempts across APEC economies and case studies on Brazil, France, Ghana, North Sudan, Malaysia, India, Indonesia, Iran, Poland and Senegal.

Regional Overviews

Fossil-fuel subsidies are present in many countries around the world. The comparison of country experiences at a regional level can help identify problems and solutions that may be relevant across a given region. These GSI publications examine fossil-fuel subsidies from this regional perspective.

Fossil Fuel Policy Briefs

Resources

Friends of Fossil Fuel Subsidy Reform

Set up in June 2010, Friends of Fossil Fuel Subsidy Reform (the “Friends”) is an informal group of non-G20 countries aiming to build political consensus on the importance of fossil fuel subsidy reform. Current members of the Friends group are Costa Rica, Denmark, Ethiopia, Finland, New Zealand, Norway, Sweden and Switzerland.